Low consumer spending bad for state's budget - East Valley Tribune: East Valley Local News

Low consumer spending bad for state's budget

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Posted: Sunday, November 2, 2008 5:38 pm | Updated: 10:26 pm, Fri Oct 7, 2011.

The state's budget situation continues to darken as Arizonans are spending a lot less than last year, especially on cars and trucks.

New figures Friday from the Joint Legislative Budget Committee put total tax collections for September at just slightly more than $830 million. That is $95.4 million less than the same month last year.

More significant going forward, the revenue is close to $125 million less than lawmakers anticipated when they adopted the $9.9 billion spending plan for the fiscal year that began July 1.

That puts the gap between expected and actual tax collections for just the first three months of the budget year at almost $305 million.

Despite the new numbers, Gov. Janet Napolitano's press aide Jeanine L'Ecuyer said there is no need for panic.

"The governor, her budget team and state agency directors continue to carefully manage the state budget, and continue to implement cost savings statewide to meet the projected shortfall," she said.

Much of the difference between September revenue and that of a year earlier is in sales taxes, a direct reflection of consumer spending. Overall, retail sales taxes were off by 6.7 percent.

But a closer look reveals that not all sectors of the economy are being hit equally hard.

Tax collections on the sale of vehicles and auto parts are down more than 28 percent year over year. That hits the state particularly hard as that revenue amounts to a fifth of what normally is collected.

The sale of home furnishings is off by more than 17 percent, a reflection of the housing market, with a decline of nearly 15 percent in building materials, hardware and manufactured housing.

And while clothing and accessory sales are off by nearly 10 percent, the sale of liquor and taxable food - items prepared for takeout - actually is up 2.7 percent, though restaurant sales are off by 4.4 percent.

Most food items purchased at grocery stores are exempt from state sales tax, though some cities impose their own levy.

Napolitano has acknowledged it will take more than directives to her agency chiefs to bring expenses into line with anticipated revenue.

That could include spending cuts, more borrowing and seeing if there is any money left in the various special state funds that were raided just to create what was supposed to be that balanced budget.

The governor said she intends to meet with legislative leaders after Tuesday's election to decide when to tackle the problem.

Napolitano said there are advantages to delaying any action until lawmakers return in January. She said by that time there will be better estimates of how much the state actually will collect this budget year.

"Also, as we get into January, we'll have a better idea of what federal stimulus dollars may be coming into the state," she said.

Napolitano is pushing for any new round of federal help to stimulate the economy to go directly to the states rather than those $600 checks that went to individual taxpayers earlier this year.

"That could make a big difference in terms of what we need to do here," she said.

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